You, personally, may not be profiting from making copies of the CD, but that is not the point of the Copyright law. Copyright protects the artist and allows him/her to benefit/profit from his/her work. If you are making copies for your friends/family - it is one less (or more) CDs the artist will sell, yet one or more persons are benefiting from the artists' work without having to purchase it. It deprives the copyright holder of royalties. Even if you are using it for educational purposes, you are technically supposed to get permission from the copyright holder.
So technically, when you buy or are gifted a CD, you own that CD (as a physical object) and can download it to your computer (for your own use) or cut up the inserts and make collages. This is okay because it is for personal use. You can "share" legally by playing in your own home to guests or by allowing people to borrow the CD. You can make compilations, for your own use. However, it is not proper under the Copyright law to copy a CD and give it to someone else.
I know it sounds harsh, but a lot of artists have lost out in the past simply because their work was copied over and over again. Laws became much tighter in the 90s when the copying and pirating of artists' works spun out of control. So really, it is about the protection of the artist. I personally wouldn't risk it and as an artist myself (visual) I know why these protections are there.
Edited to say that this is the copyright law in the U.S. I'm sure other countries have similar guidelines but I can only speak for here.